Understanding Business Valuators Reports

0 - Understanding Business Valuators' Reports

1.01 Introduction to Understanding Business Valuators’ Reports

2.01 Valuation methodologies and calculations

2.02 Valuation methodology – income methods

2.03 Valuation methodology – capitalized cashflow method

2.04 Weighted average cost of capital (WACC)

2.06 Discounting cashflows

2.07 Valuation methodology – discounted cashflow method

2.08 Valuation methodology – market method

2.09 Use of market data in private company valuations

2.10 Valuation methodology – adjusted net asset methods

2.11 Reasonableness testing in valuation reports

2.12 Normalization adjustments in valuation reports

2.13 Sustaining capital expenditures

2.14 Taxes in valuators’ reports

2.15 Disposition costs in valuators’ reports

2.16 Materiality in valuators’ reports

2.17 Industry analysis in valuators’ reports

2.18 Tangible asset backing (TAB)

2.19 Hindsight in valuators’ reports?

2.20 Discount for lack of control (minority discounts)

2.21 Discount for lack of liquidity (marketability discounts)

2.22 Impact of shareholder or partnership agreements on business valuation

2.23 Differences between share valuations and asset valuations

3.01: Common terminology in valuators’ reports

3.02: Capital assets

3.03: Capitalization rates

3.04: Discount rates

3.05: EBITDA – Earnings before interest, tax and depreciation/amortization

3.06: En bloc value

3.07: Enterprise value

3.08: Equity value

3.09: Fair market value

3.10: Fair market value adjustments to tangible assets

3.11: Free cashflow

3.12: Going concern

3.14: Personal goodwill

3.15: Transferable goodwill

3.16: Conditionally transferable goodwill

3.17: Multiples (and capitalization rates) – one size does not fit all

3.18: Non-voting shares

3.19: Preferred shares

3.20: “Premium” as used in valuators’ reports

3.21: “Price” as used in valuators’ reports

3.22: Pro forma cashflow statements

3.23: Professional judgment and contrasting conclusions provided by multiple CBVs

3.24: Redundant assets

3.25: “Special purchasers”

3.26: Sustaining capital expenditures

3.27: Synergies

3.28: Tangible asset backing

3.29: Tax shields

3.30: Working capital

4.01 Influences on the value of an enterprise

4.02 Influences on the value of an enterprise – earnings

4.03 Influences on the value of an enterprise – risks

5.01 Key Issues in Valuators’ Reports

5.02: Purpose of Business Valuators’ Reports

5.03: Valuation Dates in Valuators’ Reports

5.04: Assumptions Used in Valuators’ Reports

5.05: Levels (or Scope) of Valuation Reports

5.06: Limitations of Valuators’ Reports

5.07: Restrictions On The Use Of Valuators’ Reports

6.01: Code of Ethics of the CICBV

6.02: Practice standards of the CICBV

6.03: Practice inspections by the CICBV

6.04: Credibility in valuators’ reports

6.05: Engagement letters for valuators’ reports

6.06: Independence of a CBV

6.07: Objectivity of a CBV

6.08: The CBV as a “Qualified Expert” in Court

6.09: The CBV’s relationship with other professionals

6.10: The business valuator as a professional – relevance of membership of the CICBV

1. Introduction to Business Valuators' Reports

1.01 Introduction to Understanding Business Valuators’ Reports

2. Common Methodologies in Valuators’ Reports

2.01 Valuation methodologies and calculations

2.02 Valuation methodology – income methods

2.03 Valuation methodology – capitalized cashflow method

2.04 Weighted average cost of capital (WACC)

2.06 Discounting cashflows

2.07 Valuation methodology – discounted cashflow method

2.08 Valuation methodology – market method

2.09 Use of market data in private company valuations

2.10 Valuation methodology – adjusted net asset methods

2.11 Reasonableness testing in valuation reports

2.12 Normalization adjustments in valuation reports

2.13 Sustaining capital expenditures

2.14 Taxes in valuators’ reports

2.15 Disposition costs in valuators’ reports

2.16 Materiality in valuators’ reports

2.17 Industry analysis in valuators’ reports

2.18 Tangible asset backing (TAB)

2.19 Hindsight in valuators’ reports?

2.20 Discount for lack of control (minority discounts)

2.21 Discount for lack of liquidity (marketability discounts)

2.22 Impact of shareholder or partnership agreements on business valuation

2.23 Differences between share valuations and asset valuations

3. Common Terminology used in Business Valuators' reports

3.01: Common terminology in valuators’ reports

3.02: Capital assets

3.03: Capitalization rates

3.04: Discount rates

3.05: EBITDA – Earnings before interest, tax and depreciation/amortization

3.06: En bloc value

3.07: Enterprise value

3.08: Equity value

3.09: Fair market value

3.10: Fair market value adjustments to tangible assets

3.11: Free cashflow

3.12: Going concern

3.14: Personal goodwill

3.15: Transferable goodwill

3.16: Conditionally transferable goodwill

3.17: Multiples (and capitalization rates) – one size does not fit all

3.18: Non-voting shares

3.19: Preferred shares

3.20: “Premium” as used in valuators’ reports

3.21: “Price” as used in valuators’ reports

3.22: Pro forma cashflow statements

3.23: Professional judgment and contrasting conclusions provided by multiple CBVs

3.24: Redundant assets

3.25: “Special purchasers”

3.26: Sustaining capital expenditures

3.27: Synergies

3.28: Tangible asset backing

3.29: Tax shields

3.30: Working capital

4. Influencing Factors in Business Valuation

4.01 Influences on the value of an enterprise

4.02 Influences on the value of an enterprise – earnings

4.03 Influences on the value of an enterprise – risks

5. Restrictions & Limitations of Business Valuation Reports

5.01 Key Issues in Valuators’ Reports

5.02: Purpose of Business Valuators’ Reports

5.03: Valuation Dates in Valuators’ Reports

5.04: Assumptions Used in Valuators’ Reports

5.05: Levels (or Scope) of Valuation Reports

5.06: Limitations of Valuators’ Reports

5.07: Restrictions On The Use Of Valuators’ Reports

6. The Business Valuator as a Professional

6.01: Code of Ethics of the CICBV

6.02: Practice standards of the CICBV

6.03: Practice inspections by the CICBV

6.04: Credibility in valuators’ reports

6.05: Engagement letters for valuators’ reports

6.06: Independence of a CBV

6.07: Objectivity of a CBV

6.08: The CBV as a “Qualified Expert” in Court

6.09: The CBV’s relationship with other professionals

6.10: The business valuator as a professional – relevance of membership of the CICBV

7. 2020's challenge: COVID-19

Covid-19’s double whammy for business owners

The 3 – 5 times EBITDA myth

Covid-19’s double whammy for business owners

Many business owners have significant wealth – and retirement savings – locked into their business. Covid-19 may thus be a... View Article

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The 3 – 5 times EBITDA myth

A question disguised as a comment that business valuators often hear is: “My business is worth 3 to 5 times... View Article

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1.01 Introduction to Understanding Business Valuators’ Reports

The purpose of this book (compiled as a series of blogposts on mvi.ca) is to assist users of business valuators’... View Article

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